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Regional Characteristics, Industry Agglomeration and Location Choice: Evidence from Japanese Manufacturing Investments in Korea

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  • Ki-Dong Lee
  • Seok-Joon Hwang

Abstract

type="main"> Using extensive firm-level data for the years 1998–2006, we analyze the regional location decision of Japanese manufacturing foreign direct investors in Korea by focusing on the role of agglomeration economies. Our logit estimates indicate that horizontal agglomeration matters in the location decision, but vertical agglomeration does not. Strong evidence of country-of-origin effects is found. Japanese foreign direct investments in high-technology industries show a typical ‘follow-the-leader’ pattern, while those in the in low-technology industries are influenced by regional endowments. In addition, Japan's high-technology firms are likely to prefer urban locations so that they can enjoy the externalities of business services.

Suggested Citation

  • Ki-Dong Lee & Seok-Joon Hwang, 2016. "Regional Characteristics, Industry Agglomeration and Location Choice: Evidence from Japanese Manufacturing Investments in Korea," Asian Economic Journal, East Asian Economic Association, vol. 30(2), pages 123-145, June.
    • Handle: RePEc:bla:asiaec:v:30:y:2016:i:2:p:123-145
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    2. Lei Luo & Zhenhua Zheng & Jing Luo & Yuqiu Jia & Qi Zhang & Chun Wu & Yifeng Zhang & Jia Sun, 2020. "Spatial Agglomeration of Manufacturing in the Wuhan Metropolitan Area: An Analysis of Sectoral Patterns and Determinants," Sustainability, MDPI, vol. 12(19), pages 1-23, September.

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